“Weak peso not bad for Philippines: Diokno”

FxPH | July 2, 2018 | 77 | News

I just read the daily morning news and apparently the Budget Secretary thinks the weak peso isn’t something to worry about. “The depreciation of the peso is not bad for the Philippines, one of the country’s economic managers said on Sunday. ” Here are my thoughts about this and the import/export numbers which should give people a reason to worry!

Budget Secretary Benjamin Diokno said some sectors stand to benefit from a weaker peso.

“For the nth time, as an economist, what we need is a competitive peso — not a strong peso; a STRONG peso does not mean STRONG economy; nor does a WEAK peso mean a WEAK economy,” Diokno said in a statement.

“Diokno said families of overseas Filipino workers, the business process outsourcing industry, export-oriented industries and companies that manufacture and sell products that compete with imported goods all stand to gain from a weaker peso. ”

That is true but it should just have a minimal positive impact.

“The ‘loser’ are those who have foreign tastes (the Prada, Chanel, and Dolce&Gabbana crowd), those who travel abroad, and those who have a lot of foreign debt,” Diokno said.

In my opinion thats not necessarily true. The Philippines isn’t just importing luxury items but also food & medication etc.  Current Imports:

Philippines imports
Philippines imports

Current Imports: 8729210.00

Diokno also mentioned that Japan, China and South Korea, deliberately weakened their currencies in order to reach first-world status. I have to note though that those countries are export countries. The Philippines is a net importer. Of course Japan and China want a weak currency but for the Philippines its not as beneficial as for them.

If it will help the export companies then this could help but at the moment the Philippines has a negative trade balance and therefore the weak peso should actually hurt more than people think. Here are the current exports:

Philippines exports
Philippines exports

Current Imports: 5114530.00

From P49.93 to the dollar at the end of 2017, the peso closed 53.34 last Friday June 29. I mean you can look at the exports yourself. Did they go up since the end of 2017?

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